Cisco to cut workforce by nearly 10%
Company announces plans to eliminate 6,500 jobs, including 2,100 early retirements
The rumors were accurate, if not the numbers.
Cisco Systems (NASDAQ: CSCO) plans to eliminate 6,500 full-time jobs in an effort to cut $1 billion in annual operating expenses, the company announced in a filing with the Securities and Exchange Commission.
(Also see: Report: Cisco may cut up to 10,000 jobs)
The cuts represent 9 percent of Cisco's full-time global workforce.
In the SEC filing, Cisco said approximately 2,100 of the job reductions will be from employees "who elected to participate in a voluntary early retirement program."
Impacted employees in the United States, Canada and select countries will be notified during the first week in August. The remainder of the global workforce reductions are expected to occur at a later date in compliance with local laws and regulations.
The networking equipment giant estimates it will take pre-tax restructuring charges of up to $1.3 billion "over several quarters, consisting of severance and other one-time termination benefits," it said in the SEC filing.
The big hit will come in the current, fiscal 2011 fourth quarter, when Cisco said it expects to absorb $750 million of the restructuring charges. About $500 million of that will be related to the voluntary early retirement plan, with the remainder being spread over fiscal 2012.
Here's a question: In general, how "voluntary" are early retirement plans? Have any readers ever taken one? Is it usually a matter of taking the early retirement in lieu of a near-certain layoff? And is there a difference in terms of the company's bookkeeping whether an employee is laid off or takes early retirement? Comment below if you have any insights or wild guesses.
Cisco's revenue growth has slowed in recent years as competitors have stolen networking-equipment market share with lower-priced switches and routers. In May the company announced a broad restructuring designed to eliminate bureaucracy and speed up decision making.
Shares were up 13 cents, or 0.8 percent, to 15.56 in late trading Tuesday, not much above the stock's nearly two-year low price of 14.78 reached on June 15. Cisco shares are down about 23 percent for the year.
Among those not expected to be laid off or take early retirement is Cisco chief executive John Chambers, who, according to Forbes, has averaged nearly $39 million in annual compensation over the past six years.
The company is scheduled to announce fourth-quarter earnings after the market closes on Wednesday, Aug. 10.